The Reserve Bank of India (RBI) has given banks more time to restructure their troubled loans.

On March 30, a day before the fiscal came to close, the central bank allowed banks to continue restructuring of loans if references were made either to the corporate debt restructuring (CDR) cell or to the Joint Lenders Forum (JLF) by March 31, 2015. The CDR cell has about Rs 800 crore of debt that is referred to but not yet approved, which will benefit from the RBI's move.

Restructuring is an exercise where banks give more time to their borrowers to repay their loans.

All banks have seen a sharp rise in the restructured portfolio during the fourth quarter.

RBI had withdrawn the regulatory forbearance for restructured loans from April 1, 2015. As per the rule, from April 1, all restructured loans will have to be classified as non-performing assets (NPAs) attracting a provisioning of 15% of the loan outstanding, from the earlier requirement of 5%. Banks have to set aside money as buffer for all loans called provisioning in banking parlance.

Between July 2014 and February this year, commercial banks formed 355 JLFs for troubled cases. In keeping with their share of overall loans, public sector banks accounted for 254 such cases. The country's largest lender, State Bank of India, was handling 107 cases, as head of consortium, according to the finance ministry data. The data for the end of March is yet to be collated.

To overcome the problem of ever-greening of stressed accounts, RBI in a circular had told banks that the regulatory forbearance for restructured accounts to be treated as standard accounts if it is restructured only once will be withdrawn with effect from April 2015. Most banks were restructuring stressed accounts to hide the NPA and also to save themselves from excessive provisioning.

Ananda Bhoumik, senior director at India Ratings & Research, said, "Stepping up provisioning on restructured assets is a prudent measure. Extending the date to complete the restructuring process will help if there was a pile up of debt to be restructured."

According to an analysis of India Ratings, banks are estimated to restructure about Rs 1 lakh crore of stressed in the fourth quarter as the incentive for restructuring will be withdrawn.

A senior banker with the CDR cell said, "The circular has come at the fag end of the quarter as most of the debt is already restructured. In the CDR cell, we have less than Rs 1,000 crore of references that are yet to restructured."

Vibha Batra, senior director, at rating agency Icra, said, "The extended time period will give banks the leeway to structure revival better. However, it is difficult to estimate how much of debt will get benefited with the extended period." (RBI-DNA)